Trading volatility has been the defining hallmark of the Asian peak season winter market. But this past winter, Asia has seen the emergence of a nascent but increasingly liquid derivative market to not only trade and manage that volatility but also to shed some light into forward expectations. Liquidity in the Platts Japan Korea Marker Swaps or JKM Swaps product has shown explosive growth in volume since late-2016. In 2017, JKM exchange-cleared derivatives surpassed 9.6 million mt, nearly quadruple of 2016 volumes. The recent winter of 2017/18 has been particularly volatile, with the physical JKM spot LNG assessment not only charting the longest rally since its inception in 2009 but also briefly returning to double-digit levels not seen in three years. The recent winter saw collective total imports for Japan, China, South Korea and Taiwan over December to February reached 53.2 million mt, up 10.7% compared to the previous winter season. Chinese imports rocketed 53.4% compared to last winter, buying nearly 4.8 million mt more, to reach 13.7 million mt in total — and seizing the title of world’s second largest importer from South Korea. In comparison, Japan saw winter imports rise 0.3 million mt or 1.5%, and Taiwan charted… continue reading
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Source: CTRM Center